One of the key sectors for funds aiming for growth are smaller and medium sized companies. Stock market indices of smaller and medium sized firms can outperform those made up of the largest companies, while smaller and medium sized companies have large growth potential as businesses. This sector can be more volatile than other types of equity with less liquidity in the market compared to investments in larger companies.
The other options for growth investment funds are varied with funds investing in the largest companies listed in the UK or US, or specialist funds investing globally along themes or in specific sectors.
Absolute return funds aim to provide a return to investors independent of prevailing market conditions by using strategies that can profit from downturns as well as rising markets.
Multi-manager, multi-asset portfolio funds invest across a diversified pool of funds providing exposure to different assets. This approach can help reduce the risk of a fund by reducing the concentration of funds invested in one market. If bad times hit one market, others can benefit.
There are two broad types of structured products – structured deposits and structured investments.
Both options can provide the potential for growth, often linked to the performance of a market, such as the FTSE 100 Index.
Plans offer the potential for a defined level of growth over a fixed term period, providing a different option for growth investors.
Structured deposits can also offer capital protection, while in a structured investment, similar to a fund, the initial capital invested may fall in value as well as rise.
See the table below for structured growth plans: